Olympus Corporation has concluded its deal with private equity firm Japan Industrial Partners Inc (JIP) to offload the loss-making camera and lens business. However it appears JIP did not acquire the rights to use the Olympus brand once it assumes responsibility for manufacture.
It’s a two-stage deal. First Olympus will transfer the Imaging business to ‘a newly established wholly-owned subsidiary of Olympus called ‘New Imaging Company’ through something called an ‘absorption-type split.’
Then on January 1 next year, 95 percent of shares of New Imaging Company will go to OJ Holdings – a special purpose company established by JIP. It will then be called OM Digital Solutions. Products will carry the Olympus brand ‘for the foreseeable future’ (which would indicate ownership of the brand remains with Olympus Corporation).
An ‘absorption-type split’ followed by a share transfer is one of several methods permitted in Japanese company law to acquire a company. A company split has an advantage over a straight business transfer in that: ‘all the assets, liabilities, contracts and employees that constitute a business are transferred to the buyer by operation of law without the need for consents of creditors or other contract counterparties,’ according to legal website, Practical Law.
The Olympus announcement went on to state: ‘In recent years…the market has shrunk rapidly due to the evolution of smartphones, leading to a significant downturn for the digital camera market globally. Despite taking various steps to improve its cost structure and efficiency, Olympus’ Imaging business recorded operating losses for three consecutive fiscal years up to March 2020.
‘Under such circumstances, Olympus concluded that, by carving-out the Imaging business and operating the business under JIP, its business structure would become more compact, efficient, and agile, and it is the most appropriate way to realize self-sustainable and continuous growth.
‘With a loyal following and long history of innovative products, the New Imaging Company would be committed to building on Olympus’ accumulated expertise and to continue providing customers with innovative, high quality cameras under the new business structure.
‘Under the new company, the development, manufacturing, sales and service functions will continue tight collaboration to introduce new products that will satisfy customers,’ said Yasuo Takeuchi, President and CEO of Olympus Corporation.
The agreement applies to Olympus’ global Imaging business, which includes all R&D and manufacturing facilities. Head office, R&D and design will be relocated to Hachioji, Tokyo. Manufacture will continue in Dong Nai province, Vietnam.
The Olympus brand IS NOT listed among the assets acquired.
‘The New Imaging Company, will continue to provide customer support for the imaging products which have been manufactured and sold by Olympus,’ the press release states.
Following the transfer of the Imaging business, Olympus will concentrate on Medical and Scientific Solutions, ‘in our ongoing efforts toward making people’s lives healthier, safer and more fulfilling.’
We contacted Olympus Australia to seek more details on the impact of the transfer in the local market, with specific questions regarding servicing and warranty arrangements, and the Olympus Pro service.
‘There is currently no change to the business services in Australia/NZ, including sales and support and in the foreseeable future/post-transfer,’ an Olympus spokesperson responded
‘As the transfer process is still being finalised, in time, we will look at sharing more information and detail once it becomes available.’
The spokesperson directed Inside Imaging to the following Q&A from Olympus Corporation, attached to the Definitive Agreement announcement:
Will the Olympus brand no longer be available for use?
The new company will be using the Olympus brand from its establishment until the foreseeable future. There is no plan for use of the Olympus brand to be discontinued immediately after the transfer is completed.
Will repair and support services be affected by the transfer?
All services, repairs and warranties for products with the current Olympus brand will be fulfilled both during and after the transfer is complete. Services, repairs and warranties will continue, and customers will also be able to receive support for future purchases.
Are there any plans to change the warranty period due to the transfer?
We do not plan for the transfer to have any effect on product warranty periods. All services, repairs and warranties for products with the current Olympus brand will be fulfilled both during and after the transfer is complete. Services, repairs and warranties will continue, and customers will also be able to receive support for future purchases.
Is there a possibility that some products may be discontinued due to the transfer?
The sales of certain products are not expected to be discontinued due to the transfer.
Will products slated for sales launch in 2020 be postponed?
There are no scheduled changes to new product launch plans in 2020 due to the transfer.
Will the transfer change strategy and product line-up?
There is no change to strategy and product line-up with a continued focus on innovation which is unique to the business. We are committed to new high-quality products and services.
(Readers should be mindful that these responses are coming from the company selling the Olympus Imaging business, rather than the new owner – from whom the global photographic industry has heard nothing so far.)